Lambert Advisory - Market & Economics Presentation (4-23-21)April 2021
Miami Beach MXE District
Market & Economic Context
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April 2021
Miami Beach MXE
Residential Market Opportunity
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Miami Beach –Estimated Demand for Multifamily
Housing (Owned and Rental)
•Miami Beach population forecast to increase 0.7% per annum during next several years
•Based on current households (43,000+), this represents primary household growth of 3,100 households
during the next 10 years
•According to Miami Dade County Property Appraiser, there were more than 1,800
condominium units built between 2011 and 2020
•Total demand for condominium and rental multifamily housing estimated to be in the
range of 2,500+units during next 10 years
•Regionally, future demand for multifamily heavily dominated by rental product
•With limited development in Miami Beach past several years, appears to be abundance pent-up demand
•Miami Beach has notably higher rent/own ratio (62/38) compared to County (48/52)
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Miami Beach Condominium Market Snapshot
•Condominium sales activity has been robust past several years, with relatively
modest decline in 2020 (Covid)
•In spite of declining sale prices between 2016 to 2018, record sale prices recorded
in 2019
•In Q1 2021, sales prices have skyrocketed when compared to the past
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Miami Dade County & Miami Beach Submarket (New Multifamily
Rental Unit Development by Year: YE 1Q 2012 –YE 1Q 2021)
•Only 100+new multifamily rental units delivered in Miami Beach past decade; or, 0.2% of
all new inventory delivered countywide
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Miami Dade County & Miami Beach Submarket (Multifamily Rental
Occupancy Rate: 1Q 2012-1Q 2021)
Multifamily occupancy rate in Miami Beach increased from 91.9% in 1Q 2012 to 94.4%
in 1Q 2015, declined again to 91.5% in 1Q 2016 and has since steadily increased
reaching 94.8% as of 1Q 2021
89.0%
90.0%
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Multifamily Occupancy Trends
County Miami Beach
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Miami Dade County & Miami Beach Submarket (Multifamily Rental
Average Asking Base Rent: -1Q 2012-1Q 2021)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Average Asking Rent,
Miami Beach County
•Average asking rent for multifamily apartments in the County increased from $1,235 in 2011 to $1,576 in 2021, an annual average of 2.47%. •Average asking base rent for multifamily apartments in Miami Beach increased from $1,158 in 2011 to $1,507 in 2021, at an annual average increase of 2.67%•However, significant portion of inventory within dedicated rental buildings is within small, older buildings with no amenities and/or modern unit features.
Residential Headlines
•Substantial condominium residential demand for the foreseeable
future in all areas of Miami Beach
•Rental construction activity has been non-existent given the strength
of the for-sale market but significant pent-up demand exists
•Areas of the city with proximity to the beach have continually
outperformed other areas in terms of pricing.
•With the exception of constraints which exist for nearly every use and
discussed further below, modern residential units would sell and/or
lease very well if allowed within the district.
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April 2021
Miami Beach MXE
Office Market Opportunity
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Miami Dade County Office Employment/Development Projections
Financial Services Total
Avg.
Annual
Change
Avg.
Annual
Growth %
2000 45,242 151,462 196,704
2010 45,134 151,099 196,233 -47 -0.02%
2020 59,594 199,510 259,104 6,287 2.8%
2030 66,215 221,676 287,891 2,879 1.2%
•County office employment forecast to grow at annual rate of 1.2% during 5-10 year
•Notable reduction from 2.8% growth pervious decade
•Still, regional demand estimated to be > 600,000 SF average per annum
•However, this doesn’t account for what is potentially evolving from finance and technology sector
heighted interest in South Florida and particularly the downtown, Wynwood, and Miami Beach
submarkets
County -Estimated Office Employment Trends/Forecast
Miami Dade County, Total Office
Space Demand Employment, 10
Years
30,078
Total Office Demand Sq. Ft @
Avg. 200+Sq. Ft./Employee 6,015,000 SF
(Avg. Annual)601,500 SF
County-Estimated Office Space Forecast
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Miami Dade County & Miami Beach Submarket (New Office
Development, Square Feet by Year: YE 1Q 2012 –YE 1Q 2021)
84,462 square feet of new office development delivered to the Miami Beach submarket
over the past decade, representing 1.1% of all new inventory delivered county-wide.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
New Office Development
Miami Beach County
Source: Costar; Lambert Advisory
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Miami Dade County & Miami Beach Submarket (Annual Net Square
Feet Office Absorption): YE 1Q 2012-YE 1Q 2021)
(200,000)
(150,000)
(100,000)
(50,000)
0
50,000
100,000
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Annual Net Absorption
Miami Beach County
•From YE 2012 to Q1 2020, Miami Dade County had net absorption averaging 820,000 sq. ft. per
year) before Covid; past 12 months contributed to net negative absorption of 1.27M SF
•Miami Beach had net absorption of 122,329 square feet IN TOTAL from YE 2012 to YE 1Q 2021,
with positive net absorption in during past 12 months.
Source: Costar; Lambert Advisory
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Miami Dade County & Miami Beach Submarket
(Office Occupancy Rate: 1Q 2012-1Q 2021)
82.0%
84.0%
86.0%
88.0%
90.0%
92.0%
94.0%
96.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Office Occupancy Trends
County Miami Beach
•County occupancy past 10 years in County ranged from 86% to 92% in 2018.
•In Miami Beach, the occupancy rated ranged from a low of 90% to a high of 94%.
Source: Costar; Lambert Advisory
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Miami Dade County & Miami Beach Submarket (Average Asking
Office FS Base Rent: -1Q 2012-1Q 2021)
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Miami Beach County
•Average asking FS base rent in the County increased from $27/sq. ft. in 2011 to
$38+/sq. ft. in 2021
•Miami Beach increased from $30/sq. ft. in 2011 to $48 in 2021; an annual
average increase of 4.95%.
Source: Costar; Lambert Advisory
Office Headlines
•Strong performance of office sector in Miami Beach compared to the County market overall over
the past year
•Absorption has been modest but partially a result of a lack of product, but no one should expect a
new building boom of a large amount of office space in Miami Beach anytime soon. Demand
exists but is still relatively modest.
•High land values in City’s commercial districts due to strength of tourism and local resident
demand for services has encouraged new office development to be built outside of the City
•To the extent that the the technology and finance sectors continue to drive local demand, these
users are not as price sensitive as it relates to occupancy cost if they want to be in a particular
location
•Two drivers of location decision for office
•Where the local chief executive lives
•For tech and professional services, where their workers want to be
•Office opportunity principally exists along Washington and will be strengthened by a transit
connection along Washington or Collins
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April 2021
Market Induced Evolution
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One of Major Challenges to Investment is
Market Obsolesce of Certain Components of
Existing Buildings
•Hotel rooms along Ocean are very small and have difficultly achieving competitive
rates when compared to modern/modernized properties in Miami Beach.
•Physical nature of buildings makes them difficult to reconfigure rooms in the same footprint.
•Nature of older buildings’ public spaces (which are generally historic), back of
house, and kitchens are also a challenge to broadening the attraction among a
different type of restaurant, retailer, user, and ultimately guests
•Beyond repositioning of hotels, the configuration of these buildings creates
substantial challenges as it relates to conversion to any other use (including
residential) even though demand may be significant.
•We are working with Zyscovich to test regulatory adjustments that ensure the
sanctity of the historic character of buildings in the district but also encourage
reinvestment and repositioning so that the district will attract a broader range of
users/guests. 17
A Not Insignificant Hurdle
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April 2021
Lummus Park
Leveraging Improvement to Reset Activity & Investment Along Ocean Drive
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Buffalo Bayou (Houston)
•Completed in 2015 -$58M/160 acre park
transforming neglected drainage ditch into
a citywide showpiece
•Major public art installations, three
gardens of native flora, and over four
pedestrian bridges; two festival lawns, a
dog park, a skate park, a nature play area,
a restaurant, and an art exhibit hall
•Operated by Buffalo Bayou Partnership,
with annual funding provided by the
Downtown Tax Increment Reinvestment
Zone
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Bryant Park, New York
Transformation of the park led to nearly everything which occurred around the park.
Controlled, curated and thoughtful activation of public space attracted a wider range of visitors which in turn encouraged the private activity around the park to dramatically evolve as well.
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Bryant Park (before & after transformation)
Bryant Park
City Management
Bryant Park Grounds
(Conservancy)
Direct Jobs 2 120
Annual Budget $250,000 $25,000,000
Percentage paid from
Taxpayer
100%0%
Visitors per Year 200,000 8 million
Serious Crimes per Year 1,000 0
St Pete Pier
•Two challenges
•New Pier needed to depart from Old Pier which had
nothing between Bayshore Drive and pier head nearly 1
mile out into Tampa Bay. Needed to activate the length of
the pier to make it viable over the long term
•Beach Drive restaurants and bars were aggressively
opposed to any food on the Pier.
•Detailed how activation of the space and careful
commercial activity was going to strengthen the
area restaurants and bars rather than detract from
it.
•Not open a year, but the Pier is expected to attract
substantially more visitors in its first year than we
estimate it would attract once it stabilized.
•Feeding patrons to downtown businesses that were not
coming downtown as a result of COVID 23